Sensex bounces back, but experts advise caution

The benchmark Sensex on Tuesday rose by 265 points, or 1.4%, to 19,143 — its biggest single-day gain since November 29, 2012 — but experts said investors should tread cautiously as markets are likely to remain range-bound in near future.

One should not invest in the market for short-term returns, they added.

A string of positive news, globally as well as locally, triggered the rally in the markets and the Nifty also ended up 86 points, or 1.5%, at 5,784.

Expectations about an interest rate cut by the Reserve Bank of India in its policy review later this month, making consumer loans cheaper, pushed banking, auto and realty stocks.

Global cues such as US Fed continuing with its stimulus measures and China maintaining its economic growth target for the year also boosted investor confidence.

Brokers and analysts, however, said the uptrend was a mere rebound after a few declining sessions. “It is not a beginning of a rally,” said Deven Choksey, CEO, KR Choksey Shares & Securities.

“In every sell-off you will see a buying opportunity. This will be the character of markets till large infra projects get off the ground.”

“There will be a lot of data points both globally and locally. A clear trend may not emerge and market will remain in a range,” said Jagannathan Thunuguntla, research head, SMC Capital.

The Sensex had lost 300 points after the budget.

However, some see clear buying opportunity. “The rate cut can fuel growth. With this perspective, one can look for buying in infra, capital goods, power and auto sectors,” said Shrikant Chouhan, head, technical research, Kotak Securities.

Financial planners advise caution. “Your exposure to risks will be high when you enter a rallying market,” said Ranjeet Mudholkar, CEO, Financial Planning Standards Board.

“You should not invest in stock markets if you need that money in the next two years,” said Lovaii Navlakhi, CEO, International Money Matters.